Investing should be all about taking calculated risks and maximizing long-term returns. The best strategy is usually a rather boring one. However, it’s worth every investor’s time to take a closer look at some of the more exciting stocks floating around the exchange.
Most of these exciting, usually technology-driven, companies offer lopsided risk-reward ratios. Many of them fail spectacularly, taking hard-earned shareholder cash with them. But every once in a while, along comes a stock that can offer a return potential that’s 10, 20, or even fifty times the original investment.
Assuming the original investment is sizeable enough ($10,000 or more), these stocks have the potential to single handedly transform average investors into millionaires. In other words, a single good investment in a high-risk technology stock could more than cover for all the duds in the average investor’s portfolio.
With that in mind, here’s a closer look at some of these millionaire-makers and their potential returns over the long-term:
Trading at 34 times annual sales and nearly 20 times book value while making a loss, Shopify (TSX:SHOP)(NYSE:SHOP) may not seem like it has much room left for growth beyond its lofty valuation. However, investors often forget or fail to recognize the colossal scale of global retail and the seemingly limitless potential of e-commerce.
According to Statista, the global retail market will be worth a jaw-dropping US$28 trillion by next year. Bear in mind that much of retail is still analogue, while online shopping is still a small fraction of overall sales. According to one forecast, the global e-commerce market could reach $6 trillion by 2022, still only 21% of the overall market.
Although it’s nearly impossible that Shopify will ever dominate this industry given that Jeff Bezos’ company is firmly in the lead at the moment, it could still snatch up a sizeable chunk of the market within the next decade. Even if the company can expand sales to 1% of the market by 2022, and trade at 10 times sales by then, its stock price could multiply 20 times over.
Lightspeed POS Inc (TSX:LSPD)
Point-of-sales technology provider Lightspeed POS Inc (TSX:LSPD) participates in a tighter niche that’s more competitive, has thinner margins and less potential than e-commerce. Despite this, Grand View Research estimates that the market for POS terminals is expanding at a compounded annual rate of 7.8% and could be worth US$108.45 billion by 2025.
Given that Lightspeed’s market capitalization is currently hovering at US$1.2 billion, it seems plausible that investors could experience a multi-fold return over the long-term.
HIVE Blockchain Technologies Ltd. (TSXV:HIVE)
After the 2017 boom, it’s hard to deny the fact that cryptocurrencies like Bitcoin and Ethereum have the potential to create immense fortunes out of thin air in relatively short periods. However, buying volatile and unregulated digital assets directly can’t be recommended for regular investors.
Instead, crypto mining company HIVE Blockchain Technologies Ltd. (TSXV:HIVE) serves as the perfect proxy. The company has two large server farms in Iceland and Sweden that generate Bitcoin and other cryptocurrencies around the clock. A portion of the assets generated are retained by the company, which means the rising market price of Bitcoin has a direct correlation with HIVE’s listed stocks.
The three stocks listed in this article may not be the most stable or predictable, but they certainly have the potential to deliver at least a 10-time return on investment. Regardless of investment strategy, these exciting stocks deserve at least a closer look.
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Fool contributor Vishesh Raisinghani has no position in any of the stocks mentioned. The Motley Fool owns shares of Shopify and Shopify. Shopify is a recommendation of Stock Advisor Canada.